State of non-tariff barriers

[Unless otherwise noted, most of the information in this section is sourced from Trade Policy Review of India by the WTO Secretariat, (WTO 2011)]

The Indian government requires importers to satisfy various procedural measures. According to Doing Business 2012, it takes 9 documents, 20 days and US$1070 per container to import goods into India.

Table 1: Import procedures in India

Import procedures

Duration (days)

Cost (US$)

Documents preparation

8

400

Customs clearance and technical control

4

120

Ports and terminal handling

5

200

Inland transportation and handling

3

350

Total

20

1,070

Source: World Bank

Meanwhile, the following import documents are required to import goods in India for various purposes, including imports for consumption, warehousing, transshipment, transit, re-importation, and imports for special economic zones (SEZs):

Bill of entry/landing

Cargo release order

Certificate of origin

Commercial invoice

Customs import declaration

Inspection report

Packing list

Technical standard certificate

Terminal handling receipts

Importers need to file a bill of entry either electronically (Electronic Data Interchange system—EDI) or manually. They also need to fill in supporting documents such as packing list, and bill of lading/airway bill if the bill of entry is processed manually. Furthermore, import licence, whenever it is applicable, must be obtained from the Director General of Foreign Trade (DGFT) and sanitary and phytosanitary certificates from the Ministry of Agriculture. Custom declaration should also be submitted.

For goods imported under a preferential trade agreement or under an export incentive scheme and for qualification for duty reduction, additional documentation such as country of origin (COO) is required. It applies to most of the Nepalese goods exported to India. According to the Indian Customs’ rule, the bill of entry may be filed prior to the arrival (within 30 days of arrival) of goods to allow for faster clearance. Furthermore, a landing charge (for loading, unloading, and handling) of 1% of the c.i.f. value is added to the c.i.f. value to compute transaction value.

Goods imported for consumption in the Indian market are cleared after payment of applicable duties and charges. But, for imports cleared for warehousing, a bill of entry, filed with all supporting documents as required for goods for home consumption is required. The applicable duty is determined by Custom and is paid at the time of ex-bond clearance, for which an ex-bond bill of entry[1] has to be filled. The final duty rate is determined when an import declaration is presented for warehoused goods to be imported into the domestic tariff area (DTA). The warehoused goods may be moved from one warehouse to another without payment of taxes (including inter-state taxes). Inter-state tax would be payable only if the movement from one warehouse to another constitutes an inter-state sale on which case the transaction would be subjected to sales tax, entry tax (charged by some states[2]), and octroi if goods are sold to a warehouse located in the State of Maharashtra.

There could be delay in clearance of goods exported to India for the following reasons, for which a custom officer may raise doubt:

A significantly higher value at which identical or similar imports at (or about) the same time, in comparable quantities and comparable commercial transaction, were assessed

The sale value involves an abnormal discount/reduction from the ordinary competitive price

The sale involves special discounts limited to exclusive agents

There are mistakes in the declaration of goods such as description, quality, quantity, country of origin, and year of manufacture or production

The import declaration is incomplete, e.g. lack of brand, grade, and any other specification that could have a bearing on assessing the value of the goods

Fraudulent manipulation of documents

Rules of origin (ROO)

Preferential rules of origin are applied under regional and bilateral trade agreements. The maximum foreign content requirements range from 30 percent to 70 percent. For Nepal, it is 70 percent and change in 4-digit tariff classification. The other criteria to determine origin is sufficient transformation and change in tariff classification. There are also product specific ROO under the SAFTA (for 180 products).

Table 2: India’s ROO under PTAs, 2011

Preferential trade agreements

Maximum foreign content requirements

Minimum cumulative local content requirements

South Asian Free Trade Areas (SAFTA)a

60% of the f.o.b. value (LDCs:70%;Sri Lanka:65%) and change in tariff classification

50% of the f.o.b. value, 20% of the f.o.b. valueb and change in tariff classification

South Asia Preferential Trade Arrangement (SAPTA)

60% of the f.o.b. value (LDCs:70%)

50% of the f.o.b. value (LDCs:40%)

Nepal

70% of the f.o.b. value and change in four-digit tariff classification

n.a.

Least developed countries (LDCs)

70% of the f.o.b. value and change in tariff classification for not wholly produced or obtained category

70% of the f.o.b. value and change in tariff classification for not wholly produced or obtained category

The imports of certain goods (24 tariff lines) are subject to import restrictions depending upon their import price (see Table 2). These imports are restricted (i.e. subject to a license) when the c.i.f. price is lower than the minimum price. According to the Indian authorities, the minimum import prices are set taking into account domestic and international prices and quality (WTO 2011).

India maintains import quotas for marble and similar stones (HS 2515.11.00, 2515.12.10, 2515.12.20, and 2515.12.90) and for sandalwood (HS 4403.99.22). Quotas are established annually and administered on an MFN basis and it does not maintain bilateral quotas. Imports of the products in 415 sensitive items (up from 300 items in 2007) are monitored by the authorities. The monitored sensitive items include milk and milk products, fruits and vegetables, pulses, poultry, tea and coffee, spices, food grains, edible oils, cotton and silk, marble and granite, automobiles, parts and accessories of motor vehicles, products produced by small scale industries, and other products (bamboos, cocoa, copra, and sugar).

Anti-dumping and countervailing measures

India imposes anti-dumping duties and countervailing measures to protect domestic industry from the impact of unfair trade practices. The anti dumping duties may remain in place for five years unless revoked earlier or extended by the relevant authority. According to the WTO, between January 2006 and 31 December 2010, India initiated 209 anti-dumping investigations against 34 trading partners (WTO 2011). The products involved included chemicals and products thereof, plastics and rubber and products thereof, base metals, and textiles and clothing. As of December 2010, 207 anti-dumping measures were in force, compared with 177 on 30 June 2006. According to the WTO, India did not take any countervailing actions during the same period. Measures were applied on 30 trading partners.[3] The majority were applied on China (67 or 32.4 percent of the total), Korea, Rep. of (19 or 9.2 percent), Chinese Taipei (19 or 9.2 percent), Thailand (14 or 6.8 percent), the EU or its members states (12 or 5.8 percent), and Japan, Malaysia, and the United States (9 or 4.3 percent each).

Standards

Indian standards are established based on the provisions of the Bureau of Indian Standards (BIS) Act 1986 and BIS Rules 1987. The BIS is responsible for formulating and enforcing standards for 14 sectors. These include production and general engineering; civil engineering (as of 1 January 2011); chemical (15 October 2010); electro-technical (1 July 2009); food and agriculture (9 June 2010); electronics and information technology (1 April 2010); mechanical engineering (1 April 2010); management and systems (1 Oct 2010); metallurgical engineering (6 July 2010); petroleum, coal, and related products (1 July 2010); transport engineering (1 January 2011); textile (1 April 2008); water resources (1 April 2010); and medical equipment and hospital planning (1 January 2011).[4] There were around 18,623 Indian standards as of 31 March 2010 and about 84 percent were harmonized with international standards.

Around 81 products are subject to the mandatory BIS certification mark.[5] As of May 2011 there were more than 1,000 products under voluntary certification. The requirements for the use of the BIS certification mark are the same for domestic and imported products. Foreign producers who wish to export products subject to mandatory certification must obtain a license from the BIS. Foreign manufacturers must set up a liaison/branch office in India to obtain a license if the BIS has not signed a MOU with the country where the manufactured goods originate. The fees under the Foreign Manufacturers Certification Scheme, in place since 1999, are INRs1000 for the application, US$300 for processing, US$2,000 for marking, and a unit rate fee, which varies according to the product. The BIS license is granted to the factory address at which the manufacturing takes place and the final product is tested to assess compliance with the relevant Indian standards. After receiving a license the user must pay an annual fee of INRs 1,000, as well as a quarterly fee for units of production marked. The latter is fixed according to product.

Labeling

Packaged commodities must bear a label securely affixed. These labels should include the: name, trade name or description of food contained in the package; ingredients used; name and address of manufacturer or importer; net weight or measure of volume (in accordance with the metric system based on the international system of units) of contents; item/package sale price (MRP INRs __) (inclusive of all taxes); month and year of manufacture or packaging; date of expiry[6]; license number where relevant; and name, address or e-mail if available of person or office to be contacted in case of a complaint.

For products containing natural flavoring substances, the common name of the flavors should be mentioned on the label. The label should also indicate the animal origin of gelatine in products that contain it. The Ministry of Health and Family Welfare has recently notified the quantitative ingredient declaration requirement as an additional labeling requirement for food. More specific labeling requirements exist for specified products, such as infant milk substitutes and infant foods, bottled mineral water, and milk products.

Labels must be in Hindi (Devnagiri script) and in English. In certain instances, they must be written in the language of the locality where the product is ultimately sold. This increases distribution costs, since India has 16 official languages, and food processing companies often do not know which pallet of food products will be transported to a specific State. The requirement that packaging must specify the maximum retail price of the product, including taxes, is a further complication, since sales taxes are levied at the state level.

Sanitary and phytosanitary measures (SPS)

The main institutions involved in the establishment and implementation of SPS measures for food items are the Ministry of Health and Family Welfare, the Department of Animal Husbandry, Dairying, and Fisheries; the Directorate of Plant Protection, Quarantine and Storage; the Bureau of Indian Standards; and other state government agencies.

The imports of animal products into India require sanitary import permits issued by the Department of Animal Husbandry, Dairy and Fisheries and the permits must be obtained prior to shipping from the country of origin. The Department approves or rejects the application after an import risk analysis on a case-by-case basis. Permits are valid for six months and may be used for multiple consignments. A sanitary import permit is not a license, but a certificate verifying that India's sanitary requirements are fulfilled. Some imports of animal products also require an import license issued by Director General of Foreign Trade. The imports of animal products are only allowed through designated ports where animal quarantine and certification services are available (Amritsar, Bangalore, Chennai, Delhi, Hyderabad, Kolkata, and Mumbai). Imports of fish products are allowed through the port of Vishakhapatnam (in the State of Andhra Pradesh) and the land custom station at Petrapole (for imports from Bangladesh only).

Imports of plants and plant materials are regulated under the Destructive Insects and Pests Act 1914, the Plant Quarantine (PQ) (Regulation of Import into India) Order 2003, and international conventions. All plant and plant material consignments must be accompanied by a phytosanitary certificate issued by the national plant protection organization of the exporting country and an import permit issued by the officer in charge of the plant quarantine station. Products listed in Schedule VII of the PQ Order 2003may be imported without import permit but may be required to fulfill other conditions, such as fumigation. As in the case of imports of animal products, imports of plant and plant products may only enter the Indian territory through designated ports.[7]If commodities are found free from pests, they are cleared for import. If not, they must undergo fumigation with the accredited fumigation operators according to the Schedules V, VI, and VII of PQ Order 2003.[8] Fumigation is done at the importer's cost.[9]

[1] It is used for clearance from the warehouse on payment of duty and is printed on green paper. See here. Goods imported for home consumption are cleared under bill of exchange for same and for re-export purpose under ex-bond clearance.

About

Formerly, economics officer at Asian Development Bank, Nepal Resident Mission. Worked as a researcher at SAWTEE, Kathmandu. Also, worked as a consultant for Ministry of Commerce & Supplies, Government of Nepal; FAO; UNDP, GIZ-CIM, and ADB among others. I was an op-ed columnist for Republica between December 2008 – June 2012. I also worked as a Junior Fellow for Trade, Equity & Development program at Carnegie Endowment for International Peace, Washington, D.C .